Lunsford v. Mills | UIM Coverage | Multiple Tortfeasors

In Lunsford v. Mills (Aug. 20, 2013), the Court of Appeals addressed a very important issue in UIM (underinsured motorist) law involving two tortfeasors.

In this case, tortfeasor A caused an accident. The plaintiff (a volunteer firefighter) went to render assistance to a victim of the accident, when he was struck by tortfeasor B. A had liability limits of $1M, and B had limits of $50K, and the plaintiff had UIM limits of $400K (from a $300K business policy and a $100K personal policy). B's insurer paid its $50K in liability coverage, and the plaintiff demanded that the UIM insurer tender payment. The UIM carrier waived subrogation rights. The plaintiff later settled with A's insurer for $850K. The UIM carrier took the position that because the plaintiff received $900K, which was more than the UIM limits ($400K), that there was no UIM coverage.

The lower court and the Court of Appeals ruled in favor of the plaintiff, concluding that " Plaintiff's UIM coverage was triggered the moment that all policies applicable to Mr. Buchanan's vehicle had been exhausted; Farm Bureau was not at liberty to withhold coverage until Plaintiff reached settlement agreements with [driver A]."

It is not clear the extent to which the fact that the UIM carrier did not advance (to preserve subrogation rights). The court wrote, "Moreover, Farm Bureau's contention that the trial court's order resulted in a windfall to Plaintiff is unavailing. Had Farm Bureau tendered its policy limits . . . ., it would have had the opportunity for reimbursement and there would have been no windfall."

John Kirby taught continuing education seminars to lawyers and to insurance adjusters regarding Uninsured and Underinsured Motorist Coverage in North Carolina, and has taught on this precise issue involving multiple tortfeasors.


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